Ford family is still at the wheel

NEW YORK — Ford Motor Co. is losing money big time. Its costs are surging. It widened one of the biggest recalls ever. Its market share is being eaten away by foreign rivals. Its stock has dropped more than 20 percent over the last year.

CEO Bill Ford must be worried, but since his family owns a controlling block of the automaker’s voting stock, chances are he isn’t all that concerned about his job status. A dual-class stock structure at Ford means the descendants of founder Henry Ford run the show, and mostly don’t have to answer to other shareholders.

It’s an interesting contrast to what has happened at Ford’s crosstown rival, General Motors Corp. That automaker faces a similarly dismal financial situation, but CEO Rick Wagoner has had to justify his leadership in the face of intense shareholder scrutiny.

The Ford Family Trust holds nearly 71 million shares of Class B stock, and those shares get about 17 votes each compared with the one vote per share given to other investors, bringing its voting power to 40 percent. The family also is represented on the 12-member board, with Bill Ford as chairman, while his cousin, Edsel B. Ford II is a director.

“No one can throw him out, and nothing has to change unless the Ford family wants it to happen,” said Gerald Meyers, the former CEO of American Motors who now teaches leadership at the University of Michigan’s Stephen M. Ross School of Business.

That reality has left the rest of the shareholders with few outlets for their displeasure as Ford’s shares have tumbled, now trading around $8 each from about $10 at the same time last year and $13 in August 2004.

The situation at the second-largest U.S. automaker has been terrible for a while, and in recent weeks, it has gotten even worse.

Earlier this month, Ford announced a $254 million second-quarter loss, more than twice what it had reported just weeks before. The revised losses were due to larger pension-related costs.

The Dearborn, Mich.-based company also said that its European luxury car group, which includes Jaguar and Land Rover, will lose money for the year instead of breaking even as had been expected.

Ford is also recalling 1.2 million trucks, sport utility vehicles and vans amid concerns about potential engine fires. That followed last September’s recall of 3.8 million vehicles due to similar concerns, which was the fifth-largest auto industry recall in U.S. history.

Underscoring its woes, Ford last month for the first time sold fewer vehicles than Japan’s Toyota Motor Corp. in the United States. It also slashed its quarterly dividend in half.

Yet even with all this going on, there has been little mention of the company getting rid of Bill Ford. Instead, he seems to be getting time to straighten things out and revive this business without the worry that his job is on the line.

That’s hardly the situation at GM. The woes at the world’s biggest automaker — which also have included big losses, slowing demand and declining market share — have largely overshadowed Ford’s troubles in recent months. But the consensus seems to be that Ford is far worse off given that it is in the midst of weak product cycle and it doesn’t have as many places from which to cut costs.

Billionaire investor Kirk Kerkorian, who owns about 10 percent of GM’s stock, is demanding change, and expects it to come fast. He has pushed for a major restructuring effort, which the company is currently in the midst of taking on, and has also suggested GM partner with Japan’s Nissan Motor Co. and France’s Renault SA, something that the company’s board is now exploring.

If GM CEO Wagoner can’t turn things around to the liking of shareholders — especially Kerkorian — and on an especially tight timetable, chances are he will be out, likely sooner rather than later.

“GM has Kerkorian really calling the shots. He will stick with (Wagoner), but not unless he likes what is going on,” said Warren Neel, executive director of the Corporate Governance Center of the University of Tennessee. “But the dynamics at Ford are quite different since the Ford family has effective control.”

To Bill Ford’s credit, he is addressing the automaker’s problems.

The company has hired a seasoned dealmaker — former Goldman Sachs investment banker Kenneth Leet — as a strategic adviser to the CEO. That’s raised suspicions that Ford might sell off its luxury auto group or even take the company private, which would allow it to repair itself without having to do so under a public spotlight.

Ford has also vowed to speed up a restructuring plan that calls for cutting 30,000 jobs and idling or closing 14 factories in North American by 2012.

Such efforts were noted by Bear Stearns’ auto analyst Peter Nesvold, who upgraded the stock this week on the premise that its depressed shares will soon rebound as the restructuring effort takes hold. He thinks its shares could go to $15 a piece.

“We anticipate some investors may be puzzled initially with our out-of-consensus call — particularly given how constructive we have been since last October about Ford’s weak, near-term product cadence,” Nesvold wrote in a note to investors. “But our sense is, that view is now far more discounted into consensus thinking that it was roughly a year ago.”

How all this goes in the coming months could make, or break Ford. The company, that is. Probably not the man.